Freelancers forego £92,000 in retirement funds

Self-employed
freelancers are missing out on up to £91,512 over their working lives because they
do not receive employer contributions through a company pension scheme, a new
study has found.

According
to Prudential, UK workers earn £26,664 a year on average. Those who are members
of a company pension scheme receive average employer contributions of £2,232 a year
and contribute £945 themselves, making a total of £3,177 annually in pension
contributions.

Over the
course of an average working life, the average employer contributions alone add
up to £91,512. But self-employed workers, who can’t join a company pension
scheme, will miss out on this substantial contribution towards their retirement
funding.

While
some respondents said they planned to draw upon other sources of income when they
stopped working, almost a third (29 per cent) of business owners expected to have
to rely entirely on the State Pension for their income in retirement.

Stan
Russell, retirement expert at Prudential, said: “Self-employed workers have to
be even more proactive when it comes to saving for retirement, as they can’t
benefit from employer contributions in a company pension scheme.

“Saving
into a pension gives valuable tax relief, while professional
financial advice can be helpful in ensuring that they’re saving enough for a
comfortable retirement.”

He added:
“We know from our research that a significant proportion of self-employed
workers have no private pension and will rely solely on the State Pension in
retirement. Often this is because they have
prioritised the needs of their business over saving into a pension.

“However,
the State Pension alone is not enough for a good standard of living in
retirement, which is why saving as much as possible into a pension from an early
stage is crucial.”